On Europe, Inflation, And Gold.

In this video Philipp Bagus, Assistant professor of Economics at Madrid’s Universidad Rey Juan Carlos and author of The Tragedy of the Euro, and Alasdair Macleod of the GoldMoney Foundation talk about the eurozone facing the problem that is characterised in the “tragedy of the commons” analogy. Bagus explains this phenomenon by way of an example of overfished and over-exploited oceans due to a lack of property rights on oceans. In Europe, governments run larger deficits than their “competitors” in order to externalise the costs to all users of the currency. Knowing these incentives, the Stability and Growth Pact was put in place as per the early 1990s Maastricht Treaty, capping budget deficits at 3% of GDP and the debt to GDP level at 60%. However there was no enforcement of these rules which is why there have already been more than 80 infringements to this stability pact without any repercussions.

They talk about possible solutions to the euro crisis. Bagus points out that there are basically three different ways to go about it. Firstly, governments could make drastic cuts in public spending and privatise public assets in order to balance their budgets. However, there will be – and is – strong political resistance to such proposals. Secondly, the eurozone could disintegrate, driven by a reluctance of German citizens to pay for other countries’ expenditures. And lastly, central banks and governments could decide to print their way out of the crisis, leading to high inflation.

Bagus says that as long as the incentive for running deficits exists there won’t be an increase in countries’ savings rates. Macleod points out that there is great institutional resistance to breaking up the euro. Bagus explains that the official opinion towards the euro is positive in Germany; however the sentiment on the streets looks quite different. But as long as there is no political party devoted to this issue this mood is not likely to gain traction at least as long as inflation remains moderate.

Amid the ongoing expansion of the money supply and persistent deficits, Bagus can’t see the dollar gaining in value over the medium to long term. He also says that ECB policies are a lot more pragmatic than the ones undertaken by the US Federal Reserve. Talking about sound money, Bagus explains different ways to go about its introduction. One way would be to back all the money in existence by gold, adjusting the price of gold accordingly. Another would be to take away legal tender laws and have competing currencies. However this would require the governments to impose dramatic reforms, which is partly why they will oppose such measures.

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"The tragedy of the Euro" is an excellent book; highly recommended. It's introduction was based on the blackmail of Germany to enable that country to re-unite. The prime instigators were a pair of life-long Socialists. They have now reached the point referenced by Maggie Thatcher; "The problem with Socialism is that you run out of other peoples money to spend."

A gold standard is the last thing central banks would want. As it is, there is nothing controlling their idiotic academic powermongering schemes. 'Let me control a nation's currency, and I care not who makes its laws'.

If one presumes central banks and politicians want a fiscally responsible system, gold is the obvious answer. If one believes instead that they want power and control over the economy and citizens livelihoods, then the current system of chronic deficets will be continued.

Then I suggest you refrain from reading Jon Nadler, which would undoubtedly cause multiple and copious stigmata to spontaneously erupt over your body in response --- most likely accompanied by an involuntary and spasmotic release of your bowels.

(Come to think of it, the latter much resembles everything ever written by Jon Nadler in the first place.)

Another, in 1997: "You should not think they are dumb! Invest in gold mines, will you? Notice how quick the Australian CB hinted at taking "gold in the ground" if needed. This was said after their sale! The nature of the coming crisis will make the taking of investor property a piece of cake. You see, because gold is a commodity, you will be compensated at the commodity price of return + a fair profit, of course.".

He wasn`t just one guy, thats for sure. The postings were probably written by some asians. However they tend to be accurate, when you look at how events unfolded!

GOLDEN CHEESEHEAD ( @ANOTHER SHOCKING POST! ) ID#431263: All paper gold will be worthless just like stocks and bonds! Am I right? If not please correct!

Mr. GCH, You may be more right than wanted to be. For some it is a long torturous wait to go without paper gains. For ones outside the west, it is not hard. Days pass easily as a thousand years of history give backing TO OUR investment. "For what I hold is not an empty promise. Nor is it a major thought of debt. I am now today, paid in full!".

One new day gold will begin a rise that will end it's use as a trading medium. This reevaluation will end a tradition in London. No gold house will make a market that has no sellers, official world gold trade will end for many years! And with it will go the last true value to trade for oil. Oil will skyrocket in all currencies. Those who have metal will learn it's value in oil. All things in life change, the world will not be the same.

Many wait for the next great bull market in gold to begin before they buy. Why buy now and lose interest or stock market gains? They will miss the greatest investment ever to come in ones lifetime! The powers of this world have already begun this motion. People of simple thought have but to buy physical gold and make low as the financial wars begin! You see, gold was cornered this year. It is done. No Central Bank will sell it's 50, 100, 200 million ozs gold when 600 million is needed! I ask you, how can currency price gold? Indeed, no price will work! You think any form of "paper gold" will stand this fire? Can we do battle with lions? When oil will not take currency without gold the havenots will not sit still!

"When a thousand hungry lions fight over one scrap of food, small dogs should hide with whats in their belly".

Another: Mr. C.B., The future will look back at us with respect, as we knew not what was happening! A day will come, sir, when no paper dollar will pry gold from your hands! In that day, you will be too smart for such foolishnes

The world has changed and the gold market has changed with it. We are going back in time much further than many will accept. A time when men, such as I, will take what is yours! If you hold your value in a public way, it will be taxed or taken for the good of all. Such are the ways of extream times!

Only time will prove all things. - repeats this obsessively. Probably he was writing some posts, and had someone write others. Some have no quotes, others are all quotes.

this to Israel? The Israeli's could shoot 20 Palestinians, bulldoze a whole villiage, and the MSM et all, will report how Hamas sent 6 'rockets'(oversized fireworks) at Israel. If these Patriot missiles were going to ROK, don't you think the people on the ship, even if they didn't know what was contained in containers, would know they were to be sent to the ROK? The real question which should be asked, if these are secret technology weapons, why the hell would they send them on a cargo freighter, and not a US Navy vessel? Wouldn't they want military protection of these, and avoid the chance of pirating and capture of the contents? People need to start using common sense, instead of just reading the propagandist diversion reporting, because 95% of reporting is pre-scripted by the controlled editors.Read this article, as even Fox, before selling out, pointed to this right after 9/11 http://www.veteranstoday.com/2011/12/26/sayanim-%e2%80%94-is...

Who is the leader of the Ron Paul Grassroots movement? They've raised more than 20 million for Dr Paul even without the doctor's involvement. Surely there must be a leader of the grassroots movement. Who or what can raise that much money for him without a leader? I want to know who or what that person may be?

$32.50 per ounce then adjust for inflation. Couple hundred tops. That is if they don't have to fly over with gold detecting drones and force you to hand it over. If you are not in the U.S. you might get a better deal.

500,000 standing army as Poland had for provocating against
the 100,000 Reichswehr guard ,this time well trained and equipped would be enough to stage off the muslim invasion,
just as the Poles saved us Europeans just short of Vienna
last time around.

Reverse crusade, but with your "Liebensraum" attitude, no harm to anyone, just back to each others tribe.

"A gold standard is the last thing central banks would want. As it is, there is nothing controlling their idiotic academic powermongering schemes. 'Let me control a nation's currency, and I care not who makes its laws'.

If one presumes central banks and politicians want a fiscally responsible system, gold is the obvious answer. If one believes instead that they want power and control over the economy and citizens livelihoods, then the current system of chronic deficets will be continued."

I quoted your entire comment because it was flawlessly logical (you are my guy) but unfortunately, Ben Bernanke doesn't agree with you. He lays out his plans in his 11/21/2002 Helicopter speech and his 10/31/2003 Japan speech. They will link fiat to gold, ramp gold prices, devalue fiat, engage in gold purchases, print like crazy, and set price targets. That will ramp stocks and hold off the inevitable for a while.

They will link to gold in some way, but you are not at all wrong Strannick, because there's no way in Hell they will handcuff themselves. Gold can be manipulated to any price that suits the powers that be, a basket of currencies cannot without ruining droves of industries. So you are absolutely right, they won't handcuff themselves, but a tad bit off in thinking they only have the option to go to a pure gold standard. That isn't going to happen.

The game was gold was money, and they controlled gold.

The game is now paper is money, and they control paper and gold.

The game has only one place to go, back to gold and they will control the gold.

The problem is to view gold as a safe and sound economic basis. The central banks run a shell game and it doesn't matter whether they use gold or paper as the pea, the game is won by manipulating the pea. Don't be a sucker and think a gold standard will solve all our problems. It's like having a crook run your company and thinking a different method of accounting is going to keep him from stealing from you.

We are going to a gold referrenced system from a paper system because there is nowhere else to go. That doesn't mean the vampires latched to our throats are going away, but it does mean that anyone with gold, and with the intestinal fortitude to hold their PMs throughout the long road ahead, will win in the end.

ALL Systems, even capitalism, will ultimately fail because they ALL seek toward concentration. When will people fucking get it?

Play the victim... "socialists/fascists/whatever is a cause of my/everyone's problems." Grow up!

If Thatcher et al REALLY had cared they'd have gotten rid of their respective govts. Hypocrites, the lot of them: only saying shit to stir up hate and discontent to cloud over the FACT that they're busy behind the scenes making their friends money.

I own some, but don't you think it makes more sense to save in gold, a non-critical commodity? 'Cause savings is what we're talkin about. If a guy makes a grand and his expenses are a grand then he don't give a shite if it's FRNs, seashells or whatever.

If we all save in silver then solar panels, as an example, become prohibitively expensive. If we save in gold there is no simular disruption to commerce.

It will not end. It will transform to something much worse. There has hardly been any free market since 100 years ago. Money, values and prices have been commanded by a tiny plutocrat elite. But we were indoctrinated to live in free markets. Now whwn there is a major crisis, TPTB will blame the non-existing free markets for it and so will the population und thus hand over ever more power to TPTB. It is a really viscious trick which works like a clockwork.

"Money, values and prices have been commanded by a tiny plutocrat elite."

Shocked! Shocked!

Read history and let me know if it has EVER been anything other than this.

"There has hardly been any free market since 100 years ago."

Again, this SOUNDS good, but history tells us that as long as govts (churches/whatever vertical hierarchy) have been around there's been NO "free market." Perhaps you're confusing the times of plenty of resources (gold rush etc.) with "free market?"

In other words, Europeans will either have to voluntarily eat their peas, or else have their peas shoved down their throats. Or maybe, mix them up with their mashed potatoes, and pretend that the peas are not even on their plates.

Since the majority of the combined total world gold supply has been mined within the last century (almost 40% of it just since 1980, believe it or not), it could not possibly have been sitting in anyone's vaults for the last century.

You can call money debasement by a thousand names the output is still the same...

Back in the old times they used to have this form of execution in China, called death by a thousand cuts, where the unlucky guy was being slowly sliced and left to bleed until it died... sometimes it tooks days ...

and this is exactly whats happening to all the fiat money right now...eur, usd, jpy, chf...and this went on slowly for decades..

Now the curve becomes steeper, it starts to look like a hockey stick, more and more each day...

I'd always liked mathematics, but hated hockey. I knew about the hockey stick thing and all, as pertains to exponentials, but it's now all come together! I should embrace hockey and move to Canada! :-)

Well, the backing of currencies with gold never works, as governments will keep printing til the backing can't be sustained.

Easy money fiat systems never works either, as we are now seeing.

Hmm, if only there was a middle ground.....oh, hang on, there is, freegold.

Luckily, the world is evolving toward that system every day, and all it needs is the dollar to be cast aside (post hyperinflation), the move to a physical-only market (on its way with confidence shattered after MFGlobal, and more of the same to come), and a new reserve currency that doesn't suffer from Triffin's dilemma, as it floats against its constantly revalued gold reserves (hint, it already exists and is used in Europe).

and a new reserve currency that doesn't suffer from Triffin's dilemma, as it floats against its constantly revalued gold reserves

Fiat currencies NEVER "float" --- they merely sink.

Why should anyone have to put up with a constantly-depreciating government-issued fiat currency in the first place? Just prohibit government from being involved in the issuance of money in the first (and last) place, and everything else in monetary affairs will take care of itself within the free market.

This is where I think FOFOA's Freegold concept is fatally flawed --- fundamentally, it is just a twist on an old statist paradigm, with the value of money being manipulated by the financial elites to their own ultimate advantage. EVERY time you have a depreciating fiat currency you have wealth being siphoned off from savers and the productive economy to a sociopathic and parasitical elite. So tell me, why should we ever tolerate such a monetary arrangement?

Indeed the flaw in free-gold is obvious , the whole free gold concept is simply an attempt to make the euro seem somehow more sophisticated and workable than the USD.
All fiat currency is simply a means of wealth confiscation and freehold is nothing more than a clumsy attempt to build some kind of smokescreen for this purpose.
What about free copper or silver or platinum, "what is the difference ?"
FOFOAs treatment of the "other monetary metal" is the giveaway that the free-gold concept has a motivation other than helping the downtrodden masses.
True free gold would consume the host currency in hyperinflation as people switched their monetary assets into gold while borrowing fiat to buy even more gold.

Free.gold is mere monetary sophistry being used to lend credability to the corrupt ECB.

actually that is a good pearl of wisdom from the T-man. what is needed is gold backed MONEY as that obviates "the debt bombers." You'd need a VERY powerful General in this environment in order to pull it off. The irony that the USA actually has the guy in the form of Director Petraeus et al makes it an interesting concept if gold backed money is your thing...and your tired of a Fed AND a Treasury Department. Obviously "it's no accident that West Point is in New York." And of course Maria B even paid the next "powers that be" a visit as part of her "CNBC" thing. What a hottie! Sure she "loved all those boys" as well.

Exactly. Free gold involves a floating price of gold. Explain to me how that is more statist than the gold standard, in which goverment sets the price of gold, and changes the price (inflation ) whenever they feel like it.

The whole concept of freegold, as i understand it, is that people save in gold, which floats freely against fiat currencies, so savers are not punished, as thier gold savings keep pace with the fiat inflation.

The gold standand would be worse than what we have now, as at least those who get it can currently protect thier wealth with gold, under the standard that would not be an option, as the government would be price fixing gold.

Freegold is patently statist inasmuch as it presumes, if not demands, a government-issued, continually devaluing fiat currency. Partial theft is still theft.

Why not just let the MARKET decide what is and is not money? I can guarantee you that if I had the choice, I would piss on ANY fiat currency, and run to gold, and NOT just for my long-term savings. (One of) FOFOA's mistakes lies in assuming that there is a clear-cut and tidy division between transactional currency and savings -- in practice, there is not.

But if your savings were gold, what would that matter? When you go to a bank and say, i want to deposit $1000 into my gold account, they say, OK thats 20 grams ( or whatever). When you withdraw, money printing means your 20 grams are now worth $1100. Would that not give you the benifits of both gold and fiat? Essentially it is competing currencies. Because I cannot see governments giving up the power to print currency. Ever. It's like asking them to give up power.

Yeah, except they are devaluing the transactional currency. SInce no-one holds that currency, by definition the velocity of that currency increases toward infinite, ie it hyperinflates by design. It won't take long for the proceeds of your transaction to disappear. In such a system, people would start trading gold directly almost immediately.

Freegold is a transition state AT BEST, and will collapse to a gold standard very quickly. You probably wouldn't even be able to frame out a three month time period where Freegold was a reality.

lulz. Don't listen to mosley, he is clueless. Freegold solves triffins dilemma (and FOFOA'S dilemma): Triffin's dilemma observes that when a national currency also serves as an international reserve currency (as the US dollar does today), there are fundamental conflicts of interest between short-term domestic and long-term international economic objectives. But this is only the case if that currency does not embrace a "secondary media of exchange" that is allowed to float in value in a quantity not managed by the currency manager (i.e. physical only), and can be purchased and stored in lieu of retaining debt denominated in the primary medium.

and velocity is self correcting with freegold:

To perform well, any store of value should not be used also as a medium of exchange, as at least part of the value being exchanged in any given transaction would not be kept as savings, and would need to be further exchanged to meet current expenses. This increases the velocity of the store of value, reducing its value. Gold, like any other store of value, stores value best when it lies very still.

With a Freegold Standard, only the exchange rate of a currency with Freegold need be established to find the currency’s value, as Freegold is the proxy for the stock of value, wealth.

Freegold acts like a sponge, absorbing surplus value in any given zone, and transferring it between zones through arbitrage, out of deficit zones (net value consumers) and into surplus zones (net value producers). All sovereign entities, whether individual, state, or nation, interact with this system in the same way, only on different scales (micro/macrocosm). They may have different motivations for individual transactions when storing value in or retrieving value from Freegold, but the mechanism they use will be the same - the purchase or sale of unencumbered gold in a floating free market.

The Freegold market is established by the bidding for unencumbered physical gold in preference to encumbered gold derivative products, as these derivatives are found to not perform as well as unencumbered physical in monetary crisis, and as a result are discounted by the market. This is a simple and spontaneous reaction in accord with the self-interest of market participants. When monetary confidence falters the preservation of value becomes the focus, and in this gold is the obvious focal point.

In practice, any currency is valued by the market only by that which it can be exchanged for. Under a Freegold Standard, currencies are technically, but not officially, backed by gold - a currency that cannot be exchanged anywhere anytime by anybody for gold will be avoided in favour of one that can. It is privately-held gold reserves that make themselves available for this exchange, at the right (floating) price, not Central Bank gold reserves. "

Yeah, don't listen to me, or bother to address my points which have proven true time and again throughout the history of paper currency.

When monetary confidence falters the preservation of value becomes the focus, and in this gold is the obvious focal point.

Duh, this has to happen. What do you think happens to the value of the transactional currency when this happens? Zimbabwe was under Freegold for about thirty seconds, when it promptly collapsed to a gold standard.

In practice, any currency is valued by the market only by that which it can be exchanged for. Under a Freegold Standard, currencies are technically, but not officially, backed by gold

The author (you?) has no idea what the word "backing" means. They are NOT "technically" backed by gold. They are totally unbacked! Just like with Zimbabwe dollars, the market will lose faith in the transactional currency, and start using gold directly. Backing means a solid tie at a fixed price, such that there is either EXACTLY as much currency in circulation as there is gold in the treasury, or there is LESS circulating currency than there is gold in the treasury. If the market sets the price, the transactional currency will revert to it's intrinsic value--ZERO.

This is not a difficult concept, but FOFOA has cast a spell over many goldbugs. These fools are CONVINCED that the Euro is backed by gold (and somehow different from any other currency in the world), and any idiots listening will lose 100% on any paper currency bets. His only redeeming feature is that he tells people to own gold. But he does it for the wrong reasons, and when people see through his convaluted logic, they question the value of holding gold.

This is not a difficult concept, but FOFOA has cast a spell over many goldbugs. These fools are CONVINCED that the Euro is backed by gold (and somehow different from any other currency in the world), and any idiots listening will lose 100% on any paper currency bets. His only redeeming feature is that he tells people to own gold. But he does it for the wrong reasons, and when people see through his convaluted logic, they question the value of holding gold.

Plus, nobody should have to use rambling, torturously circuitous, 243,000 word essays in order to make their (supposedly simple) arguments.

And I still fail to see why the situation we already have today ---- fiat currencies with a (relatively) open gold market --- is not this supposed "Freegold" in practice. I guess I just need to read 3,781,970 more words on the subject before it all finally dawns on me.

But is the same problem not inherent in gold standard. Does it not involve giving the government the power to fix the price of gold, to be repriced whenever they feel like it?

I'm not arguing, just trying to invision the best solution. Coming from a physics background, i find my understanding of a system is deficient until I can understand it mathamatically AND conceptually. Relativity took a long time, quantum mechanics took longer. Economics makes no fucking sense whatsoever. Mathamatically it seems a deflationary system would work the best, but i'm still at the stage where I don't even know how much I don't know, and am thus hopelessly niave on many matters.

Everyone here seems to agree the system is fucked, but nobody as yet seems to have offered a solution which makes mathematical sense to me. Abolishing fractional reserve and treating the economy as biological rather than mechanical also makes intuitive sense, but mathematically it is very inflexible.

Still, love ZH and the comments. Am learning fast, but worry about always reading people whom I agree with. Anybody recommend a good anti gold site? Keep googling "gold in a bubble", but yet to find convincing argument.

"Fixing" the price of gold is not the answer but will result in failure just like before.
A gold standard must be a system linked to a weight of specie and redeemable in such just as the US constitution is written.

You must be able on demand to withdraw specie from the bank if desired.

This is the only way to ensure integrity of the system and hold the finance industry accountable.

Anything else just results in fractional lending and eventually.. here we go again....

The US cannot return to a gold standard. The euro has the dollar checkmated.

Just the existence of the euro renders this attempt futile. First, as soon as the US devalue with respect to gold and thereby achieve a better 'gold backing' for their dollar, the euro would immediately enjoy effectively the same backing as long as there is a liquid market for gold in euros.

Second, as soon as the market suspects that the price of gold in dollars is artificially low (which would probably be the case), gold in euros would be valued higher. This would devalue the euro with respect to the artificially high dollar, cause the US trade deficit to widen and gold to flow from the US to Europe.

The ECB can speed this process up at any time by purchasing gold in euros and thereby increasing the valuation gap. Rickards would probably call this currency warfare, the nasty Europeans devaluing again, but in reality they would have just called his bluff, i.e. his still artificially overvalued dollar.

The mere existence of the euro prevents the US from returning to a gold exchange standard. Anything short of free convertibility in physical gold at a market price would fail after a short period. The requirement is just1) physical only settlement in euros without any synthetic supply (unallocated)2) enough liquidity for CBs to trade their quantities

You seem to imply that there is something special, if not magical, in the existence of the euro. But it is nothing but another (failing) fiat currency, fundamentally no different from 10,000 other now-dead fiat currencies that came before it. What you seem to be implying is that the USA could not go back onto a gold standard as long as ANY other fiat currency exists in the world, or the dynamic that you describe would take hold; that scenario can be argued (although I would say weakly), but the euro by itself has nothing to do with it.

geez, you would think i would know how to spell mathematically by now. Maybe it's not that economics makes no fucking sense. Maybe I smoke way too much of the green stuff. Or i'm just stupid. Either way, thanks for the ideas guys. To think I spent the last 15 years reading MSM.......

even after all that "fiat" is proved to be "fools gold"? some..."power"...indeed. We fielded a 10 million man military during WWII. And now look at the USA. Twice the population...all the wars you could wish for...and no military to face them. Gee...leaving aside what an historical anomaly it is for the USA to lose wars...it sure doesn't sound like a recipe for success. And of course...NO ONE BENEFITS! Granted we only had a nominal gold standard in WWII...although in WWI it was still pretty powerful...there was only one entitlement back then either way: you're right to watch as your Armies were victorious. Now Wall Street (of all places!) literally has a Judge declare that stealing gold is perfectly legal! The government will not be far behind...stealing...EVERYTHING. I'd prefer to get out while i still can myself. None of these people are to be believed...let alone taken seriously. "I got mine" is all they care about. Hell...Rahm even had a sign for it: "Go Fuck Yourself" it said. Quite frankly i was surprised he lost his job. I wonder how he feels about say...."losing an entire Army corps"? "I hate them the most" comes to mind. the age of "We go to the moon in this decade not because it is easy but because it is hard" as been replaced with "we demand our government check not because it easy but because without it we all will die." why should the private sector care then? what's in it for them? if your answer is "more bailouts" then THEY are the fools indeed.

Oh would it now? And who, in your nonsense world, would receive the benefit of this money first? If someone gets something for nothing, it isn't a good system, and it WILL end in failure. You can't get gold for nothing. You either have to work and trade for it, or pour your sweat into the earth for it.

r u kidding? this is a GREAT system. If you're the government! Listen to the "Ode's to Financial Repression" on Bloomberg. AS IF NEW YORK IS THE BIG WINNER HERE. HAHAHAHAHAHA! How pathetic. Washingon DC is the big winner! You and i are now beholden to everything THEY do! Outside of ZH does anyone even care? Hahahaha. Of course not. the name of the game is...REPRESSION. That's GOVERNMENT work...not the work of some financial..."digitati." In this world..."you gotta pay for that." No thanks, i'll pass. Wake me up when someone isn't lying about "all the money being made." And course....bond yields reflect...ALL OF THIS! If this economy was in actuality recovering then we would have a wonderfully upward sloping yield curve...with pricing power and final sales soaring...us the "proletariat" would actually be getting paid, etc, etc. Nope. Instead all there is is..."government work." GET USED TO IT.

I think the idea is that fiat would only be a transaction intermidiate? Every time a central bank printed the price of gold in that currency would adjust accordingly. If they print too much too often people would stop holding it for even the shortest periods of time. If everything was denominated (priced) in gold units and converted to fiat only for transactional convenience we would be protected from monetary inflation to a large degree.

Sounds like a good idea to me. Definitely a step in the right direction. Reality is we need transactional currencies but know that governments cannot be trusted to keep the fiat money supply linked to anything unless they are forced to.

Having the government set the price of gold is not going to work because they can only be trusted to lie, cheat and steal. It simply requires that evryone agrees that a currency is vlaued by dividing its quantity into the known quantity of gold reserves and the market would adjust the price of gold in each currency continuosly.

I think you might not understand FOFOA. He says he is merely observing and that the wise thing to do is to play along with what is going to happen anway. You on the other hand are asking for some heavy heavy lifting. You are issuing the call to change government....and human nature. We as a population love fiat, we like to borrow it and pay it back later when it is worth less. We just don't like finding our savings melt away.

Many people here at ZH say they want harder money but lets be honest...that is purely fantasy. It is our ideal. On a day to day basis I'll bet the average ZHer is as fond of fiat as they are the stuff it buys. We only say we want gold backing of our currency. We rejected it before and will again because it is just too hard and we don't really like hard.

"WE" rejected nothing --- it was government(s) who KILLED the gold standard, over we the people's objections.

It is erroneous, and insulting, to attempt to claim in regard to a gold-backed currency that "we rejected it and will again because it is just too hard" --- it was the central bankers and their political lackies (or vice-versa) who rejected gold, NEVER the common man. Your understanding of monetary history is very much confused.

"We as a population love fiat, we like to borrow it and pay it back later when it is worth less. We just don't like finding our savings melt away."

Leaving aside the moral & ethical considerations of where & how fiat originates...how does borrowing what you don't have (and being charged high rates of interest for it) equate to any love of doing so? Its an item of a depreiciating asset or the item has already been consumed before the bill (plus interest) ever hits the mailbox.

I never have "got it" on that point.

To my way of thinking, borrowing is too easy. Shouldn't the "deep thinker" statists in government be promoting saving for the item in question?...unless of course, they prefer debt slaves ;-)

the statists are promoting "savings"...in the form of "buy government debt or die!" what we need is INFLATION. that connotes "risk" in the system...and creates WORK in order to drive down "the price." instead we have an emerging DEFLATION. Deflation devalues YOU AND ME...the people who have to "work for a living." Capital is basically ominopotent in this world...as it is owned either by "mega-government" or "Mega-Inc."...and that's it. The rest of us...for all intents and purposes..."get nothing." I am curious about one thing: why do we even have elections anymore? What purpose do they serve?

"the statists are promoting "savings"...in the form of "buy government debt or die!"

Sure looks that way. I do find it interesting that as of Jan.1 the commoner won't be able to "buy & hold" the most basic of government debt..."savings bonds". They too will go digital...into the ether, into that great digital divide...lol.

The problem as I see it is, they can't get real inflation by printing digital money and sticking it on a digital pallet next to the old digital debt. They can certainly destroy its acceptance as money I suppose. Which is their ultimate purpose I think. They want a purely command & control credit system with the serfs on the very bottom. This means doing away with "walking around money".

What we know as currency.

"I am curious about one thing: why do we even have elections anymore? What purpose do they serve?"

I'm curious why they bother even taxing us, they can print whatever they need...so the eggheads say. It can only be to hold the citizens wealth down to certain levels.

As for elections, I'm still kinda old school I guess...

"One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors."-Plato

Of course, it doesn't help that we churn complete imbeciles from our universities decade after decade either ;-)

I am curious about one thing: why do we even have elections anymore? What purpose do they serve?

Elections serve to cultivate the illusion that common citizens have some sort of say over how they are governed. The division of the War Party into ostensibly opposing democratic and republican factions serves to support the illusion of choice on election day. The charade of democracy is difficult to maintain if you don't at least pretend to have more than a one-party system.

nmewn then wondered:

I'm curious why they bother even taxing us, they can print whatever they need...so the eggheads say. It can only be to hold the citizens wealth down to certain levels.

The purpose of the income tax is to force citizens into indentured servitude for at least part of the year. That the federal income tax was created at the same time as the private outsourced federal reserve monetary system is no coincidence. The way to keep the citizenry from abandoning federal reserve notes is to compel taxes payable in federal reserve notes and impose threatening penalties for noncompliance. It's an easier system to maintain than outright slavery, and far less controversial since most people will never figure it out.

I agree, except that I don't believe that "saving" should necessarily equal piousness. Saving is just something that people should be allowed to do, it's not better or worse than anything else. And, really, in the current system nothing is really saved anyway: it's a circulation issue, how fluid/liquid things are; and, if one were to look at the intent of the founders of the US, the whole idea was to promote trade and commerce (which, if everyone were to save, wouldn't really happen).

NOTE: as long as people expect a State to protect Their property then they are open to being exploited by the State (the State taking your property). "Independent" money can still be abused by the State.

HFT ain't good for me. CDS's gonna make some messes. TBTF gonna fall off a cliff. Wall Street is dead meat. Banks so bold layin' dead and cold. Gonna be prepper people, and the rest of the Sheeple. God bless this mess. Holy fuck! I'm a poet, and didn't even know it.

Every President through modern history has spent money like their hair was on fire. No exceptions. And, Congress approved an endless litany of unbalanced deficit spending budgets year after year. They didn't mind creating slavery for the tax payer, and printing free money compliments of the Fed for their banker / Wall Street buddies to bail them out of the mess created by the miracles of deregulation. lobbying, and corruption. All accomplished regardless of which party or President was in charge. They are all cut from the same block of cheese, and they are all culpable.

I just hope we survive the end result of having criminals running the country for decades. Put your money in something tangible, because the dollar is going to continue to tank, resulting in way more inflation. And, banks may not survive the firestorm of margin lending, credit default swaps, and derivatives created that exceed 250 quadrillion dollars in total - more money than the gross domestic product of the entire planet for decades.

The only paper I own is the stuff I wipe my ass with. Market paper is worthless, because I cannot do a good job of wiping my ass with it. Gold was worth $28.00 an ounce when I was a kid. Silver was worth whatever was printed on the coin you spent. Any one think those days are coming back? All of the lying bum fucking aristocracy of the Age Of Paper Power can burn in their paper suits soonest. I won't even bother pissing on them to put out the flames. I collect gold, silver, lead, copper, real dry powder, food, tools, diesel fuel, and other useful commodities. There is a community of folks all doing the same, so skill sets and extra eyes and hands can guard each others sixes, and "break on through to the other side, break on through to the other side, YEAH "

By the time you finish dividing, you need to start again, as printing keeps going on. How about saying that the price of gold is free floating to what one will sell it for at the moment of the transaction?

"The price of gold was only truly in a free market for a brief moment in 1980"

Hope this isn't one of those stupid "Reagan as Hero" things.

BTW - IF govt is involved then there is NO such thing as a "free market." Keep in mind that a majority of people in the US would be fine with legalizing pot, yet... (and speaking of Reagan, it was his administration that unleashed more Statist power with seizing property due to [possible] drug connections)

If these guys knew what they were doing, they would be printing faster so that we would have a healthy rate of inflation of about 4% - 5% per year, the Dow would be over 15,000 by now, gold would be over $2,000, and the world would be enjoying a mini-boom in the economy.

Bond vigilantes would be out in force driving up yields and forcing more money out of bonds and into stocks.

The inflation would be high enough to pretty much evaporate half the deficit in 20 years.

actually that is one of the greatest one liners ever. is it susstainable though? i have doubts. anywho...RT is absolutely right...we need inflation since as we all know with Effen Global "the alternative is confiscation." That is WALL STREET confiscating private property. Those people have to be completely RETARDED if they think they're the expert in that field. Taxes are going to SOAR as "the real experts" (governments) step in to "deal with the crisis." Look at this example:http://www.youtube.com/watch?v=ROxvT8KKdFw&feature=player_detailpage

Forcing more money out of bonds and into stocks STILL won't resolve the issues of not being able to force people to spend what they (still) don't/won't have.

There will be no more growth in consumption. Look around. Even if you were to wipe out ALL debts there'd still be the issue of having to crank up the costs of everything, which would further push down demand.

It all follows the oil production curve. As oil production has flattened out so too has growth: though, however, "economic" growth has continued to outrun it a bit with govts acting as a slower brake (but no matter, the FULL application of the brakes WILL eventually occur).

Some of us don't need to check the PC winds of the last 5 minutes TO SAY WHATEVER THE FUCK WE WANT.

And yes, clamoring for a heavy yellow piece of rock to save you in time of confusion or calamity, is about as intellectually rigorous as sticking your winky high up into the same sex's intestinal tract.

Unless of course you treasure the thought of buying a Coca-Cola with gold shavings contaminated with your own hepatitis. In which case, don't let me interrupt.